Saturday, February 23, 2008

What actually is Recession ?

We have for quite sometime been hearing about the word 'recession'. What actually is it, what effects will it have on the country and on other countries ? Let's see in detail.

A country is said to be in recession when the GDP of two or more consecutive quarters is negative. However the effects of the recession will be felt well in advance, might be several quarters before. For example, the symptoms of a recession might be the pop up of unemployment, businesses coming to a halt, a stock market crash and many more.

When there comes a problem of recession in a country, the associated countries also suffer a setback. This can be illustrated with an example. The causes of a possible recession might be inflation, and other economy related problems.

Now, recession is slowly creeping into US. Hence, countries like India, Pakistan that are extensively dependant on US will surely suffer a setback. As a result of recession, the economy begins to crumble. The only and the effective solution could probably be the cut in the Interest Rates which is what the Federal Bank has done now. As a result of this, US is now showing some signs of recovery.

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